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Established Member
michjd75
Posts: 37
Registered: ‎02-03-2011
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Scared to pay off CC for fear of reduced CL

I am really trying to pay off all my credits cards to 0% util by May 2011. Last year, when I paid a big chunk off, they reduced my credit limit.  Need feedback if that is still the case for anyone else.  Since that time, pretty much all but 1 collection account has fallen off.  Please help me decide what to do since I don't want to spend all that money and have my FICO scores go down. 

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rbh
Posts: 356
Registered: ‎06-25-2009
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Re: Scared to pay off CC for fear of reduced CL

So would you rather keep paying interest on your balances out of fear that your credit limits would decrease?  Would make more sense to pay it off if you have the funds to do so. 

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Moderator Emeritus
MarineVietVet
Posts: 14,521
Registered: ‎07-14-2009
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Re: Scared to pay off CC for fear of reduced CL


michjd75 wrote:

I am really trying to pay off all my credits cards to 0% util by May 2011. Last year, when I paid a big chunk off, they reduced my credit limit.  Need feedback if that is still the case for anyone else.  Since that time, pretty much all but 1 collection account has fallen off.  Please help me decide what to do since I don't want to spend all that money and have my FICO scores go down. 


Hi there.

 

There is always a chance of your CL being reduced but paying off debt should be #1 on your list of priorities IMO (In My Opinion). And as rbh said you will save money because of lower and/or no interest charges.

 

 

 

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

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Senior Contributor
Wolf3
Posts: 3,197
Registered: ‎01-24-2010
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Re: Scared to pay off CC for fear of reduced CL

 


michjd75 wrote:

I am really trying to pay off all my credits cards to 0% util by May 2011. Last year, when I paid a big chunk off, they reduced my credit limit.  Need feedback if that is still the case for anyone else.  Since that time, pretty much all but 1 collection account has fallen off.  Please help me decide what to do since I don't want to spend all that money and have my FICO scores go down. 


If you pay down your CC to 0% util, then you score should go up even if you experience some CL reductions. 
Holding a balance is costing you money and reduces your available credit which is more important than you CL, 

 

Established Contributor
JayRizzo
Posts: 582
Registered: ‎10-17-2010
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Re: Scared to pay off CC for fear of reduced CL

Early last year was full of uncertainty as the Card Act was something new for both lenders and consumers.  As a way to protect themselves, lenders quickly began looking for ways to cut costs which included: Interest rate hikes, closing unused accounts, and even reducing credit limits.

 

Now a year later as the waters are calm, lenders are opening the door again to regain lost customers by offering more incentives, etc.  But, they still have a hint of a restrictive guard up as they were also blindsided by the Card Act.  I've read some posts where long-standing customers were able to call and have their credit lines reinstated after they were reduced.

 

Moving forward, you should never have fear of the inevitable, but strength, courage, and knowledge to challenge and conquer it if and when it does occur. 

 

These prior posters have given you a wealth of knowledge.  I've been reading and taking their advice since late last year and now I don't feel alone out in the credit world.  You have a FICO Family walking along with you, so you'll never have to type the words "scared" or "fear" in the title again.

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LilMirth
Posts: 3,091
Registered: ‎08-09-2008
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Re: Scared to pay off CC for fear of reduced CL

Hi Michjd75 & welcome! :smileyhappy:

 

You've gotten excellent advice so far! I just want to highlight one point. The size of your credit lines is not a factor in FICO scoring. What is a factor is utilization, which is a snapshot of how much of your revolving credit lines you're using (as reported to the credit bureaus) at any given time. Whether your credit line is $5000 or $500, you only need to manage the percent of utilization.

 

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Established Member
michjd75
Posts: 37
Registered: ‎02-03-2011
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Re: Scared to pay off CC for fear of reduced CL

Thank you for the background on the Card Act.  I agree that I have received great advice thus far.  I'm definitely going to take the advice given here and pay my cards down.  When my limits were slashed, I did not call to get it reinstated.  I guess I didn't think they would do it since my FICO was so low.  Thanks again!

Established Member
michjd75
Posts: 37
Registered: ‎02-03-2011
0

Re: Scared to pay off CC for fear of reduced CL

Thanks for the clarification on utilization versus actual limit.  I, incorrectly, was basing my premise on something I was told earlier - that credit bureaus count it as a negative if you have low dollar limits.  

 

BTW - I wanted to give everyone an update.  Just yesterday I received an alert from MyFICO.  My score went up to 640!  I went from 81% utilization to 62% with just one card reporting.  I am eagerly waiting for the other cards to report my new balance.  Only 2 more cards to pay off!

 

Thanks again, everyone!

Contributor
crivas21
Posts: 77
Registered: ‎07-30-2007
0

Re: Scared to pay off CC for fear of reduced CL

  keep doing that and before you know it your fico will be at 700.and when you pay it all off you can use your cc to put some gas or buy a soda but make sure you pay the full balance by the end of the month,that way you still using credit cards but  owe nothing when statement  cuts thus your fico will be at its highest. crivas21

--------------------------------------------------------------------------------
Starting Score: 07/30/2007--EQ 575/ TU 560
Current Score: 01/18/2011--EQ 777/TU 765/EXP 763-(pull by CU)
Goal Score for 06/31/2011--EQ 800/TU 800/EXP 800


Regular Contributor
cutemarty1
Posts: 213
Registered: ‎02-03-2011
0

Re: Scared to pay off CC for fear of reduced CL

don't be scared. Maxed out my credit of 1000. Then paid in full after a while. They slashed my limit to 500 now am up to 5000

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